US tariffs: What do Trump’s tariffs mean for Germany and the world?

At first, Donald Trump had suspended the tariffs against Mexico and Canada, now they come into force. What does this mean for the countries and Germany concerned, and what could follow next?

Which tariffs have been imposed?

For exports from Canada and Mexico to the United States, punitive levies of 25 percent have been in place for exports from Canada and Mexico. Trump had also announced that they would double the import duties ordered in February to 20 percent of goods from China.

In turn, Canada immediately announced tariffs of 25 percent on US goods worth 30 billion. After 21 days, this amount will be increased to a total of $ 155 billion. China announced against tariffs to agricultural products and other measures against US companies. From March 10, additional tariffs of 15 percent on chicken meat, wheat, corn and cotton from the USA are to be raised on other agricultural products such as soybeans, pig and beef ten percent.

Mexico’s President Claudia Sheinbaum also announced countermeasures. These would include tariffs and other measures that she wanted to announce at a public event on Sunday, she said at her morning press conference in the National Palace. “We have to keep calm and a cool head.”

What does that mean for Germany?

At first, the polled in Germany imposed only indirectly: The economist Samina Sultan from the Institute of German Economy (IW) Cologne considers an economic output that is already reduced worldwide, based on model invoices, as early as the currently imposed editions. Comfortable Germany must therefore expect a gross domestic product that was 0.4 percent lower in 2026. The announced steel and aluminum tariffs as well as other payments already threatened by Trump could make the local industry even harder.

For the German automotive industry, the higher tariffs on imports from Mexico are particularly harmful because it often has production locations in Mexico, says Sultan. “Cars and auto parts sometimes cross the limits several times before they are completed. These supply chains are in question through the customs increases.” You can also see this problem at the Munich IFO Institute. However, there is also a potentially positive effect: German companies could benefit if demand is postponed to them because the competition from Canada, Mexico and China in the USA becomes more expensive. Of course, this only applies as long as there are no additional tariffs on European goods.

The Association of the VDA automotive industry complains about Trump’s plans and sees a considerable burden and negative consequences for consumers – especially in North America. For Germany and Europe, on the other hand, the VDA sees an impact on the local jobs when companies have to operate the markets for protectionism and increasing geopolitical tensions more and more.

What do the tariffs mean for the USA itself?

Dorothee Hillrichs from the IFO Institute assumes that tariffs are driving inflation in the United States, among other things because intermediate products are becoming more expensive for American manufacturers. In addition, food prices could increase, which would particularly affect poorer households. Model calculations of the IFO to tariffs assume that export and industry in Canada and Mexico will be hit more strongly than in the USA, but these are not spared.

The IW expert Sultan expects Trump to bring production to the states more and more. In this case, in his view, there is no way past higher tariffs. “It seems secondary that it should cause considerable damage to the US economy itself.” A repayment of production to the USA would inevitably drive inflation due to the higher production costs. The products would be more expensive for consumers. The United States is also dependent on raw material imports.

How do the affected states react?

In addition to the customs steps already described, Canada, Mexico and China have announced measures beyond tariffs. Canada could be concerned with restrictions or the stop of oil exports to the USA. China announced possible restrictions for US companies. The EU Commission has also switched on, criticizes the tariffs that are now imposed and calls on the USA to rethink it. They threatened heavily integrated supply chains, investments and economic stability on both sides of the Atlantic.

What options would the EU have in the event of tariffs?

Trump has repeatedly threatened with high tariffs compared to Europe. If you come, the EU has already announced quickly. During Trump’s first term, the EU had confidently countered new taxes on steel and aluminum products from Europe on Bourbon Whiskey, Harley-Davidson motorcycles and jeans. How strongly the EU reacts this time will depend on Trump’s concrete notice.

According to Sultan, the examples of Canada and Mexico show that negotiations with the Trump administration promise little success. After all, both states initially promised the United States better protection against illegal migration and drug trafficking, but the tariffs initially pushed had now been put into force.

Since Trump uses tariffs to achieve goals outside of the economy, it is conceivable that the EU also puts other measures into the room than in counterparts, says Hillrichs from the IFO. This is how China is threatening to show less use in anti-drug fighting. Basically, with countermeasures, it is crucial to make not important intermediate products and not to rely on products that cannot be obtained from other countries than the USA.

Threats a global customs spiral and what would it mean?

This ultimately depends on Trump and the reactions of the affected countries, so it is difficult to predict.

If there is a customs escalation, IFO expert Hillrichs believes that this will drive inflation worldwide and put pressure on the global economy. This also means high planning uncertainty for companies, which could lead to moving investments. However, some companies also shifted production locations to the United States – as desired by Trump – in order to avoid tariffs.

Can the United States afford a customs war against the rest of the world?

According to the IW economist Sultan, the consequences for the United States are becoming increasingly serious, the more countries they occupy with tariffs and the more countries themselves react with countermeasures. “An extensive trade war against the rest of the world will make the United States considerably poorer – not only through the economic loss that is associated with it, but also through the increasing isolation. Trade is not only the pure exchange of goods, but also stimulates the competition and exchange of ideas.” When the USA is increasingly leaving the world market, they make room for other actors such as China.